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Abstract

Countries face a new threat that strikes at their ability to balance protection of intellectual property rights against other priorities, such as public health. They may have to pay substantial compensation to companies that dislike domestic intellectual property laws. This threat is much more significant than the Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”), a landmark international agreement concluded twenty years ago, that for the first time required all countries to provide “minimum” levels of intellectual property rights; before that time, countries were not obligated to provide any such rights at all. Since the conclusion of TRIPS, policymakers and scholars have strived to preserve local flexibilities to consider domestic policies, such as public health. However, those flexibilities may quickly evaporate if companies can bring claims against countries for compromising private investments under so-called “investor-state arbitration” claims. This is not a theoretical problem—Eli Lilly is currently seeking $500 million in compensation from Canada because Canadian courts invalidated two of its patents under prevailing law. In addition, there are unique issues raised by Eli Lily’s claim that transcend broader concerns raised by scholars and commentators concerning investor-state disputes. In particular, if Eli Lilly’s claim succeeds, it will disrupt internationally accepted norms that permit countries to have different standards of protection. This Article provides a detailed analysis of Eli Lilly’s case of first impression. In so doing, the Article both explains why an arbitration tribunal should reject Eli Lilly’s claims, and predicts the likely impending threats to domestic regulation of public health that intersect with the interests of pharmaceutical companies. This Article ultimately proposes specific language to incorporate in pending agreements to forestall such predicted harms.